Canadian CEOs remain confident their companies and the Canadian economy are on the right growth track, but fear inflation, the high cost of living, new technologies, a tight labour market, and geopolitical uncertainty will derail future growth, according to KPMG International’s 2023 CEO Outlook.
Tima Miroshnichenko
The report said most CEOs are confident in the growth outlook for their company (80 per cent) and the Canadian economy (89 per cent) over the next three years. However, the unprecedented list of challenges and potential headwinds has tempered their optimism from last year’s exceptionally bullish outlook, by 11 and 7 percentage points, respectively.
“Despite some softening in the economy, Canadian CEOs remain confident about the Canadian economy and their company’s growth outlook over the next three years,” said Elio Luongo, Chief Executive Officer and Senior Partner, KPMG in Canada. “CEOs are tackling demanding, evolving, and complex challenges yet remain resilient and confident in their outlook. They are reassessing their strategic priorities and redoubling their efforts on talent management and technology while weighing the macroeconomic and geopolitical impacts on their organizations and people.”
Cdn CEOs 2023 | Cdn CEOs 2022 | YoY Change | Global CEOs 2023 | Global CEOs 2022 | YoY Change | |
Own Company | 80 % | 91 % | -11 % | 77 % | 85 % | -8 % |
Domestic Economy | 89 % | 96 % | -7 % | 78 % | 85 % | -7 % |
Global Economic | 69 % | 66 % | +3 % | 73 % | 71 % | +2 % |
The report said seven in 10 Canadian CEOs (71 per cent) say rising interest rates and tightening monetary policies could prolong any potential recession, compared to 77 per cent of global CEOs. Like their global counterparts, 75 per cent of Canadian CEOs also believe cost-of-living pressures will negatively impact their organization’s prosperity over the next three years (vs. 76 per cent globally).
“The biggest risk to their growth outlook – the one keeping Canadian CEOs awake at night – is the impact of technology disrupting their company or market,” added the report.
“While regulatory risks dropped from the top spot in 2022, it remains in the top four as CEOs grapple with the complex and everchanging regulatory landscape in any number of areas from tax, trade and supply chain to net-zero carbon emissions and environmental, social, and governance (ESG) requirements.
“Geopolitics and political uncertainty risks have also become much more prominent factors that could negatively impact growth plans. While geopolitical uncertainty moved to No. 2 from No. 5 among Canadian CEOs, their global counterparts now rank it as the greatest risk to growth, particularly notable given that it didn’t make the top five in the 2022 survey.”f
Canadian CEOs 2023 | Canadian CEOs 2022 | Global CEOs 2023 | |
Emerging / disruptive technologies | 1 | 2 | 2 |
Geopolitics and political uncertainty | 2 | 5 | 1 |
Operational risk | 3 | 3 | 2 |
Regulatory risk | 4 | 1 | 5 |
Supply chain risk | 4 | 11 | 4 |
To mitigate the risks and navigate uncertainty, Canadian CEOs see attracting and retaining top talent as their top operational priority to deliver growth. That’s followed by advancing the digitization and connectivity of operations and improving the customer experience. By comparison, the operational priorities among global CEOs are digitization, talent, and tied for third improving the customer experience and organic growth, said the report.
Fifty-seven per cent of Canadian CEOs are prioritizing more capital for technology (vs. 54 per cent globally) and 43 per cent are investing in developing their workforce’s skills and capabilities (vs. 46 per cent globally). This represents a much more balanced approach than last year when Canadian CEOs had an 80-per cent technology and 20-per cent workforce investment. These findings are in line with the recent KPMG Global Tech Report that revealed many organizations face tighter technology budgets and will need to be laser-focused on connecting technology spend to business outcomes, according to KPMG
“Talent and technology go together, hand in hand. When used effectively, technology can be powerful, but it needs to be tied to specific business goals to drive growth, operational efficiencies, and better customer experiences,” said Stephanie Terrill, Partner and Business Unit Leader, Management Consulting, KPMG in Canada.
“In a tight labour market, CEOs recognize they need to hold on to the right talent and give their employees the opportunity to upskill or retrain to deploy the technologies, Whether it’s fending off cyberattacks, implementing and monitoring decarbonization programs, or addressing operational or regulatory obstacles, the ability to have data and insights at your command to help you make the right decisions is invaluable.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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